Although there has been a small spike in the number of mortgage applications in the last few weeks, mostly fuelled by first time buyers rushing to take advantage of the favourable stamp duty rates before they go up in June, for the most part, the UK property market remains stagnant with very little activity.
Figures for mortgage lending in 2011 certainly back this up—lending was at its lowest for more than thirty-five years. However, unlike the rest of the housing market, the buy to let sector was the only one that actually grew last year as lenders sought to take advantage of the demand for buy to let mortgages from landlords eager to cash in on the shortfall in rental accommodation.
But despite the positive outlook for landlords hoping to make money in the current buy to let boom, it is still not easy to get financing from the high street lenders, so even though more than 72% of landlords have borrowed money on some of the properties in their portfolio, most still feel that lenders are making it prohibitively difficult to obtain new financing, which in turn is restricting growth in the buy to let sector—without money, a landlord can’t increase his portfolio.
And if the EU has its way and buy to let lending is lumped in with residential mortgages whereby eligibility for a loan is assessed on the basis of income rather than predicted rental yield, a situation described as “fundamentally misguided” by the Council of Mortgage Lenders, the situation will only get worse.
